Axis Conversations | Klaus Welle
Five questions on Europe’s geopolitical future, economic power and the politics of Brussels
About Axis Conversations
Axis Conversations is a series of dialogues with leading voices from politics, business, diplomacy and public policy — people with first-hand experience of the forces shaping Europe and the wider world.
Through these conversations, we explore the ideas, decisions and trends that matter to business leaders, policymakers and anyone seeking to understand a rapidly changing geopolitical landscape.
The series will also feature special editions from major international gatherings, including the World Economic Forum in Davos and the Munich Security Conference.
Our first conversation was with Klaus Welle and took place on 2 September 2026 at the Axis Advisors offices at the heart of the European Quarter on Rond-Point Schuman in Brussels.
The Conversation
Q1: What are the main threats and pressures facing Europe today?
Europe is facing three external shocks simultaneously: Russia, the United States and China — alongside a significant internal political challenge.
Russia’s aggression is not limited to Ukraine. The original Russian objective was to establish dominance over Central and Eastern Europe.
At the same time, the United States is increasingly focused elsewhere. Europe has effectively become the fourth priority, behind the Western Hemisphere, Asia and the Middle East.
That has very practical consequences. Europe cannot assume that American military capacity will always be available when it needs it. We therefore have to rebuild our own defence industrial capacity.
China presents a different challenge. It is using Europe to absorb industrial overcapacity while retaining leverage through dependencies, including critical raw materials such as rare earths.
And then there is the internal challenge of populism.
I would put it very simply: populism is the method; nationalism is the content.
But we should distinguish between a constructive and a destructive right. There are legitimate political differences over migration, culture and other issues. Parties that respect democracy and the rule of law can be part of a functioning political system.
The real danger comes from those seeking to dismantle the European Union, democracy or the rule of law.
Europe should integrate constructive forces perceived as being on the new right into the political mainstream, while isolating destructive forces on both ends of the political spectrum.
Q2: Where does Europe stand geopolitically — and what should its ambitions be?
Geopolitics is fundamentally about power and influence over a geographical area or region — who controls territory, strategic routes, resources and the relationships that determine how power is exercised.
The European Union is arguably the most successful geopolitical project since 1945. It transformed the space from the Rhine to the Black Sea — something comparable, in historical terms, to the westward expansion of the United States in the nineteenth century.
But this transformation took place under a benevolent American security umbrella.
That umbrella is now disappearing.
Russia, China and increasingly the United States are challenging the assumptions of the post-1945 order. We are therefore moving back towards a nineteenth-century logic, in which territory, strategic chokepoints and access to raw materials matter enormously.
Europe has to become a geopolitical power in its own right.
Defence has to be the first priority. But defence cannot be sustained without economic growth, technological capacity and secure energy supplies.
At the Martens Centre, we have developed the European Power Project around seven dimensions: economy, technology, defence, decision-making, energy, demography, and culture and identity.
Europe has to strengthen all seven if it wants to become a genuine geopolitical actor.
The response to the war in Ukraine shows that this is possible. European financial support has been decisive, and defence integration has advanced significantly.
The challenge now is to turn the response to crisis into lasting European strength.
Q3: What can Europe do to get its economy growing sustainably?
Following on from the answers to the first two questions, Europe’s growth problem is to a significant degree also a geopolitical problem.
Germany provides a stark illustration. After the Second World War, Germany experienced annual growth of around 5%. Today, growth is close to zero. Twenty years of stagnation in Italy have already shown how prolonged economic weakness can reshape a political system.
Europe cannot assume that its traditional industrial strengths will be enough to carry it into the future.
The automotive industry is an obvious example. Germany has built enormous economic strength around cars, but the industries that will define the next generation of global competition are increasingly in technology.
The contrast is striking: ARM, founded in Britain, has a market value of roughly $250 billion, while the entire German car industry is worth around $200 billion.
The point is not that Europe should abandon its existing industries. It is that staying in old industries is defensible; failing to grow in new ones is fatal.
Europe is actually very good at creating start-ups. The problem comes when they need to scale.
Once a European company requires something like €150 million of financing, it often finds that the necessary capital is easier to obtain in the United States. The company moves there — and increasingly becomes an American company.
Europe therefore needs deeper capital markets and a better mechanism for turning its enormous pool of savings into productive investment.
There are successful models we can learn from. The Nordic countries have created substantial pools of pension capital. France has used its Programmes d’Investissements d’Avenir to mobilise public and private investment. And Scale Up Europe is seeking to bring institutional investors into European technology financing at scale.
The fundamental problem is one of collective action. Large institutional funds often find individual European companies too small, while smaller funds lack the scale.
The state therefore has an important role — not necessarily as owner, but as regulator, facilitator and co-investor. Public participation can provide the quality signal that encourages institutional capital to follow.
Regulation matters too. Europe needs to move faster. Direct European regulation can sometimes be preferable to directives that require several years of national implementation — by which time companies may already have left.
Europe has already seen what happens when it fails to act. We were once well positioned in solar technology, but China ultimately captured the market.
The question is not only whether Europe can preserve what it has, but whether it can help create the industries of the future.
Q4: As a Brussels veteran, what do you think those beyond the bubble understand least about how the EU really works?
The biggest misunderstanding is that people assume the European Union works like a national political system.
National systems are essentially systems of fusion of power. The executive and legislature are closely connected.
The European Union is fundamentally a system of division of power. The Commission, the Council and the European Parliament are genuinely independent institutions, and almost everything requires negotiation between them.
The European Parliament is also a real parliament — in many respects closer to the nineteenth-century understanding of what a parliament is than some national legislatures.
What makes Brussels particularly interesting is that constitutional-scale change remains possible. The Spitzenkandidat process, for example, was a significant constitutional innovation that emerged from within the European system.
Today, defence is probably the most important area in which that constitutional evolution is taking place.
There is also a misunderstanding about the European External Action Service. Its delegations are often very strong, but its Brussels structure has historically been weaker. People coming from national ministries do not necessarily understand how the European Parliament works — and that can create significant institutional friction.
The European Union is a fundamentally different political system — one built around the division of power and negotiation between genuinely independent institutions.
Q5: What gives you the most reason to be optimistic about Europe’s future?
I have often quoted Jean Monnet:
“I am neither optimistic nor pessimistic. I am determined.”
There are enormous challenges, but this is also a moment of tremendous opportunity.
Under tremendous pressure, you can either break — or become a diamond.
About Klaus Welle
Klaus Welle has spent more than three decades at the heart of European politics.
He served as Secretary General of the European Parliament, Secretary General of the European People’s Party (EPP) Parliamentary Group, Director General for Legislative Committees and Chief of Staff to European Parliament President Hans-Gert Pöttering.
Earlier in his career, he headed Foreign and European Policy at the CDU Central Office and served as the party’s spokesman for Europe.
Today, Welle chairs the Academic Council of the Wilfried Martens Centre for European Studies and remains active in academia and public policy.